Landmark Lawsuits: Canadian Investors Sued in Two ESG-linked Cases
9 December 2025
The Canada Pension Plan Investment Board (CPP Investments) and Canadian asset manager Purpose Investments are the subject of two separate ESG-linked lawsuits which could hold key future implications for companies and shareholders.
CPP Investments – the world’s sixth largest pension fund manager – was sued by four Canadians who are due to retire after 2025 at the end of October. The lawsuit alleges that the organisation is “breaching its legal duties by subjecting pension contributions to undue risk of loss from poorly managed climate risk”. Purpose Investments, meanwhile, has been sued by The Ontario Securities Commission (OSC), which has accused the asset manager of making “contained misleading statements about Environmental, Social, and Governance (ESG) factors” in its communications to investors.
Key Client Takeaways:
Novel ESG-linked Canadian Cases
- According to the respective plaintiffs, the CPP Investments case is the first time that a Canadian investor has been sued for mismanaging climate risks, while the lawsuit against Purpose is the first major Canadian enforcement action for greenwashing in funds.
Setting Sustainability Precedents
- CPP Investments and Purpose Investments are facing separate lawsuits that could set major precedents for sustainability and ESG accountability. The rulings could redefine compliance expectations, signalling that ESG mismanagement and greenwashing will face stricter enforcement even without direct monetary harm.
Sharpened Scrutiny and Investor Impacts
- These cases underscore growing regulatory and legal pressure on ESG disclosures and climate risk management. Misrepresentation can undermine market integrity and investor trust, while poor climate risk modelling could expose millions of Canadians to reduced retirement benefits or higher contribution rates — making ESG a core governance and risk issue.
The two lawsuits reflect the rising trend of legal action being taken to address sustainability- and ESG-related issues. Although organisations often argue that they are acting or are doing the best they can, in the eyes of many plaintiffs these actions are insufficient to address the already significant and continually spiking risk. The results of the two cases could prove key to both companies and their investors, setting precedents for future cases on similar issues.
The lawsuit against CPP Investment argues that the organisation’s reported climate modelling “drastically underestimates the financial risks of climate change” to the organisation. It also alleges that by “severely underestimating and failing to disclose climate-related financial risks” CPP Investments risks exposing Canadians intending to retire after 2050 to “dramatically reduced” retirement benefits, the need for substantially higher contribution rates, or both. Ecojustice, one of the legal firms representing the four claimants, has stated that this is the first case of a Canadian investor being sued for mismanaging climate risks.
CPP Investments abandoned its formal net zero commitment in May, a polarising decision which drew sharp criticism from some quarters. The filing alleges that the pension fund currently “lacks adequate measures to manage climate-related financial risks”, with the backtracking on net zero a key element of this concern. The plaintiffs particularly argue that CPP Investments has failed to address the systemic risks that climate change poses to the broader financial and economic systems, while investing in companies and assets that depends on the “expanded and prolonged use of fossil fuels” for their financial performance and long-term viability.
The case is seeking declarations from the Court regarding CPP Investments’ obligations to contributors and beneficiaries to address climate-related financial risks to the funds it manages and orders for CPP Investments to disclose information about how it is approaching climate-related financial risk. It also challenges the use of “black box” climate models in financial decision-making.
The claimants are not seeking monetary damages from CPP Investments. Over the next year records are expected to be filed and the claimants will prepare for a merits hearing. Updates on the case are likely to arrive sometime during H1 2026.
The OSC’s greenwashing case against Purpose Investments relates to “false and misleading” sales communications made by the company and its founder and CEO Som Seif between September 2019 and March 2023. These claims were about the extent to which ESG factors were considered in the investment decision-making process for investment funds managed by Purpose. This included Purpose claiming in October 2019 that its funds represented 75% of total AUM already operated with its then-new ESG framework. However, the OSC alleges that funds that already considered or were going to consider ESG only accounted for 29% to 35% of total AUM.
“When making public sales communications, it is important that investment fund managers do not make false or misleading statements when describing how they make investment decisions for the funds they manage,” the OSC said in a statement. “The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation and to contribute to the stability of the financial system and the reduction of systemic risk.”
This first major Canadian enforcement action for greenwashing in funds signals tightening regulatory scrutiny on ESG claims and raises significance governance questions which companies and shareholders must pay attention to. The result will set a precedent for enforcement even without investor complaints or monetary harm, with integrity of disclosure being the focus of the case. It could also prove key in establishing that ESG is risk management rather than optional branding and underscore that misrepresentation undermines market integrity and investor trust.
An initial hearing for the OSC v Purpose Investments case was held in October, with a follow-up hearing expected sometime this month. In October, the two parties were told to try to agree on a schedule for all remaining steps before a merits hearing in May 2026. Purpose said in a statement that it will “vigorously contest” the OSC’s greenwashing allegations, while CEO Seif added that the case is “not supported by the facts”.
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Last Updated: 9 December 2025